USD/CAD has climbed above the 1.37 level. In the view of economists at the Bank of Montreal, the pair could reach in the next few weeks.

Loonie to gradually recover in 2023

“Currencies have a long and storied history of overshooting, and we suspect the loonie is at risk of a more intense short-term sell-off. A test of the 1.40 is certainly a risk in the weeks ahead.”

“Ultimately, we expect the US dollar to lose some of its formidable steam around the turn of the year as the end of Fed hikes comes into view. And, we thus expect the Canadian dollar to gradually recover in 2023, albeit ending next year lower than we previously expected at around 1.30.”